Bronte Media

Peter Krasilovsky points to Tribune disclosing that 80% of its online revenue is derived from classifieds versus display. There are two observations from this: 1) search based business models win in the online advertising world and 2) If I am a journalist, I’d think about a career change right about now.

As Peter points out, although classifieds represent around 34% of revenue they roughly account for 50% of profit in the offline world. But I think the assumption that the same split online will play out is wrong.

More likely classifieds will continue to account for the majority of revenue and more than 100% of the profits (i.e. they will fund some journalism).

The reason why is that the Internet is fundamentally a direct marketing medium. I don’t mean that in a strategic classification, I mean that when an advertiser spends $ on the Internet, they expect a financial conversion event to be met. There are too many stories in the mainstream press on companies like Ford and Coke and Procter and Gamble. They mean nothing to the online advertising industry. It is Lowermybills, Vonage, Netflix and other direct marketers that buy out the vast reserves of online inventory.

Further drilling down into the classifieds representing 80% of online revenue, I would not be surprised if Careerbuilder represented 80% of Tribune’s classifieds revenue. Long time readers know that I am in love with Careerbuilder. Indeed, their stake in the firm could be nearly worth the entire $8bn that Tribune will be nearly sold for.

The Internet has made classifieds better and has not as yet measurably made journalism better. That in itself should account for different distributions.